Monday, October 3, 2011
Ron Kelly (WSC board president) called to say that our request for documents and correspondence was costing the WSC a lot of money and that we should come to him if there were any concerns about him or the WSC board. Kelly repeated that he, “had a lot on his plate and our open records request was interfering with his efforts and the WSC.”
Note: Photos of the officers and directors of the Drippings Springs Water Supply Corporation are no longer posted on the water supplier's website, nor will you find anything about their background and bios. DSWSC is a member-owned water utility. It serves about 1,400 home and commercial customers in the Dripping Springs area. The board is holding its first meeting tonight (Monday) since GM Doug Cones' firing at 7 p.m. at the corporation's headquarters, 101 Hays Street, Suite 406. Meanwhile, Cones' attorney says they are evaluating possible legal action. And the Texas Attorney General's Office will not confirm reports that it is investigating the operations of the DSWSC.
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By Charles O'Dell
A newly appointed board majority did what three previous members of the Dripping Springs Water Supply Corporation (WSC) board who were forced out of office by a recall election last April for trying to do – fired its long-time General Manager.
The new board majority, appointed in April to replace the three ousted board members, fired General Manager Doug Cones in a 3 – 2 vote at a special meeting held September 19, 2011. The firing of Cones came after a closed session. Board president Ron Kelly would only say the firing was, “For cause,” but indications are that personal motives, official deception and outside interests may be behind the action.
Cones served as General Manager for more than twenty-four years. During that time the public water system consistently received a Superior rating from the Texas Commission on Environmental Quality (TCEQ) and customer/members consistently gave water service high marks.
Many Corporation members are confused and disappointed by the board action that appears to be based on earlier claims against Cones already proven to be false, and new unsubstantiated claims apparently fabricated by board president, Ron Kelly, with help from Dripping Springs city officials.
“I don’t know who’s running the water system now,” said one WSC member.
Less than six days after the abrupt firing of Cones there was loss of water pressure in Meadow Oaks, a Dripping Springs subdivision. WSC personnel attributed the loss of water pressure to a “computer glitch.” The official explanation was that a computer indicated the nearby storage tank was full when it wasn’t. Then three days later water pressure failed for a second time in the same subdivision. This time it was, “lightening striking the equipment,” according to office personnel.
“When I tried to shave and take a shower early Sunday morning there wasn’t sufficient water pressure,” said Terry Phillips, a retired Ag teacher, who lives in Meadow Oaks. “I called the office but no one answered. Then I called Doug Cones WSC cell phone and finally Cones home phone before reaching him. Doug told me that he no longer worked for WSC,” said Phillips.
When Phillips moved to Dripping Springs eleven years ago, “The first person to introduce himself was Doug Cones,” Phillips said. Cones gave Phillips four telephone numbers to call if ever there was a problem with his water. “Any time day or night,” Cones had told Phillips.
“We hope the water is safe now,” Phillips said.
When contacted by phone, Kelly identified the interim operator to be PGMS of Dripping Springs. Kelly said he entered into a $6,200 a month “rollover” contract with PGMS to “oversee the water system until a new GM was hired.” When asked how PGMS was selected, Kelly said, “Our attorney, Phil Haag (McGinnis, Lochridge & Kilgore) recommended them.” In a later telephone call, Haag said that, “I don’t know how PGMS was selected.”
Other contradictions exist and unanswered questions remain. Who authorized Kelly to enter into a contract with PGMS, and to do so without a public bidding process? Who is telling the truth about how PGMS was selected? Who wrote the “rollover” contract with PGMS? Who signed the contract without board authority? Why was Cones fired before an interim operational plan had been approved by the board and put into place?
HaysCAN has filed open records requests with the WSC, the City of Dripping Springs and the Texas Attorney General seeking documents that will help answer these and other important questions, and determine if the firing was justified or retaliation.
Kelly was elected board president after he and his two fellow board members were appointed in April to replace Steve Harris, Larry Brewer and Gilbert Wolf, all who resigned rather than face a recall election count. While the three new board member credentials looked impressive enough, they did not prepare anyone for what was to follow.
Initially, Kelly and Cones appeared to get along well enough. Cones continued managing the Water Corporation operations and Kelly concentrated on WSC policy. The previously ousted board members had actively engaged in micro management of the water operations in clear violation of Corporation By-laws.
Kelly began acting outside the collective authority of the board by taking actions on his own and then asking the board to, “ratify and approve” his unauthorized actions. This can be seen in various board meeting agenda, including the October 3, 2011, agenda.
The September 29, 2011, News-Dispatch edition reports that, “Kelly said a comprehensive plan for the future of the WSC will be presented to members and the public at the next regular board meeting October 3.” A review of board minutes didn’t produce any board approval of such a plan, and the board members we spoke with weren’t aware of any such plan having been authorized.
In a September 29, 2011, letter to his fellow WSC board members, Board Vice President, Jim Walden, listed 7 specific actions that Kelly engaged in outside his authority.
In July, Kelly’s relationship with Cones began to turn sour after the board approved a succession agreement that gave Cones the option to retire at age 66 or to stay on as General Manager.
When Kelly told his board that the WSC was going to, “double its operations when it purchased the LCRA 290 water line, and needed to gear up for it," Cones pointed out that there wasn’t sufficient information to make that decision. There have been no open discussions regarding the vague Kelly purchase plan.
Cones had developed a close working relationship with LCRA personnel when its water line was extended along 290 to supply WSC, and Cones knew that Kelly’s vision lacked any meaningful analysis. Cones encouraged the board to scale back Kelly’s requested financial contribution to the quickly formed Utility District Corporation coalition that was preparing a bid for portions of the LCRA water infrastructure.
For Kelly this was the last straw and Cones had to go, apparently even if Kelly had to fabricate a crisis.
“I investigated Cones” Kelly Said
Kelly set out to fire Cones by resurrecting the Steve Harris accusations already proven to be false. When that didn’t work, Kelly began his personal investigation as board president even though a Texas Attorney General Office review of two CPA audits of the WSC financials found nothing amiss.
After the fact, Kelly got two other board members to join him in authorizing an investigation that he had already commissioned, along with a process that required the investigator to present his findings to the corporation counsel, Haag, who in turn would report the findings to the full board. But that’s not what happened.
Kelly, a former FBI employee and retired Security Director for Temple-Inland, had already hired his private investigator friend, Craig Young, who also happens to be a friend and neighbor of board member Greg Perrin. Young is a member of the WSC.
Violating the board approved investigation procedure, Haag failed to report Young’s findings to the board, only to Kelly. That report indicated there was no evidence of a problem with Cones. Kelly did not share this report with the other board members.
Faced with an empty gun, Kelly created an easement issue that really isn’t an issue at all. Kelly got help from Dripping Springs City officials who it is believed gave Kelly a list of easements they had problems with when constructing the City sewer lines. The claim is that Cones failed to file some easements and thereby placed WSC at risk of trespass.
At the September 19, 2011, board meeting Kelly told the board about these new “transgressions” by Cones, but refused to show them any documentation. Kelly also announced that he had sent the, “Young investigation materials,” to the Hays County District Attorney for their review. The DA had not looked at the materials as of September 28.
Why did the other two appointed board members, Perrin and Foster, join with Kelly in voting to fire Cones without seeing any evidence of wrongdoing?
Kelly had previously suggested that board member Perrin become Cones deputy, and board member Marge Foster had previously asked Cones for the Office Manager job.
The Set Up and A Public Hanging
According to sources, Kelly had taken it upon himself to convene a private meeting on the morning September 6, 2011, preceding the regular September 12th WSC board meeting the night before. Kelly, using the Young investigation report to create a list of questions, confronted Cones at that meeting with allegations of wrong doing, despite them having been previously shown to be unfounded.
Others at that private Kelly meeting included Michael Grimes (CPA), Joel Wilkinson (long-time engineer for the WSC), and general counsel Phil Haag. Kelly asked Cones to leave the meeting while he conferred with the others. Grimes and Wilkerson both are reported to have told Kelly that, “Nothing is there.”
Firing Cones at the September 19 special WSC board meeting appeared to be an advertised public lynching and Cones’ adversaries were present to witness it. An eclectic group of participants included the previous three board members who had been forced to resign, the corporation member, Bruce Turbow, who was facing a WSC criminal complaint of theft and fraud, and Dripping Springs City officials who have long coveted the corporation for its $3 million cash reserves and only $250,000 of debt.
The five Dripping Springs City officials and employees in attendance were Bill Foulds (Mayor pro-tem), Spider Williams (city councilman), Ginger Faught (Deputy City Administrator), and Shot Glosson (City road inspector).
Kelly appears to have cooperated with the former ousted board president, Steve Harris who owes $850 for a newsletter he sent to members trying to save his job and using a WSC credit card for payment, Bruce Turbow, the WSC member facing a criminal complaint for stealing WSC letterhead and forging a fake press release by the board, and City officials who want Cones fired and out of the way.
Kelly wants the board to forgive the Harris $850, and to drop the criminal complaint against Turbow. On his own, Kelly instructed attorney Haag to prepare a settlement agreement after having received a letter from Turbow. It’s on the October 3, board meeting agenda.
Open Records Violation
On the morning of September 28, 2011, HaysCAN hand delivered an open records request to the WSC office. At 2:15pm that same day Ron Kelly called to say that our request for documents and correspondence was costing the WSC a lot of money and that we should come to him if there were any concerns about him or the WSC board. Kelly repeated that he, “had a lot on his plate and our open records request was interfering with his efforts and the WSC.”
Kelly’s telephone call was a clear and blatant violation of the Public Information Act (open records). This violation is being reported to the Texas Attorney General.
Conflict of Interest and Professional Ethics
Over the past two years, WSC costs associated with its attorney, Phil Haag, exceed $300,000. At one point Haag was taking and editing minutes of board meetings, preparing the employee handbook, is still writing the board meeting agenda, and we believe has participated in multiple Open Meetings Act violations by the WSC board.
Posted by RoundUp Editor at 8:10 AM